Berkshire Shares Suffer Second Biggest Plunge In 7 Years

Previously we noted that while a variety of hedge funds, ETFs and central banks are getting slammed by today's 9% drop in AAPL shares, few have been as badly hit (even if they can more than afford it) as Warren Buffett, whose Berkshire Hathaway is looking to lose more than $3.8 billion on its AAPL position thanks to his holdings of 258 million shares of Apple stock which make him the third biggest shareholder after passive investors Vanguard and BlackRock.

Today's drop brings Berkshire's holdings to about $36 billion, and a $3.8 billion loss, and has also hammered Berkshire Hathaway's Class A stock which is down more than $15K today, or 4.93%, its biggest one day drop since the February 5 VIXtermination event. Ignoring that one-time drop which quickly reversed, one would have to go back to August 2011 when the US was downgraded, to find an even bigger drop.

That said, Buffett may be enjoying the drop: the billionaire first announced Berkshire was buying Apple in February 2017 despite his usual aversion to tech stocks and following his disastrous foray into tech investing with IBM. On Feb. 1, 2017, Apple's shares were around $129 so the Oracle of Omaha is likely still in the green on the first portion of stock he bought. But Berkshire added to that stake significantly the last two years and at far higher prices. In Q1 2018, Berkshire bought another 75 million shares of Apple, adding to an existing stake of 165.3 million shares Berkshire already owned at the end of 2017. He told CNBC at the time that he clearly likes Apple, and "we buy them to hold."

"We bought about 5 percent of the company. I'd love to own 100 percent of it. ... We like very much the economics of their activities. We like very much the management and the way they think," Buffett told CNBC's "Squawk Box."

In August, when he disclosed his latest purchase, Buffett said that "the iPhone is enormously underpriced” compared with the utility it offers. Of course, when you are the world's third richest man, everything is "enormously underpriced."

Tyler Durden (pseudonym) is the lead writer at ZeroHedge. Tyler represents the idea that a return to truly efficient markets is a possibility and ...
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Tyler Durden (pseudonym) is the lead writer at ZeroHedge. Tyler represents the idea that a return to truly efficient markets is a possibility and a necessity.

After having experienced the inner workings of capitalism at various asset managers and advisors, Tyler believes that the current model is flawed. He argues that a deleveraging at every level of modern society is needed to reinspire the fundamental entrepreneurial spirit.